Automobile prices double against Thailand

While the world and region's automobile markets are sluggish because of the economic recession, automobiles in Vietnam are sold well despite high prices.

Rising by nearly 500 automobiles against October, total domestically-assembled automobile sales in November made new all time high with 12,259 automobiles, up by 132 percent against the same period last year.

Giant Toyota sold 3,464 automobiles in November, a month-on-month increase of 447 automobiles. Following was Truong Hai with total automobile sales of 2,177 units, GM Daewoo with 1,711 units and Vinamotor 1,318 units and so on. In November, members of Vietnam Automobile Manufacturer Association (VAMA) obtained the highest sales since the start of this year.

Overall, in the first 11 months, total domestically-assembled automobile sales reached 116,654 units, surpassing the targeted figure of 110,000 automobiles of the whole year set at the start of the year. The main reason for such high increase was sharp growth of demand; resurge of value added tax and registration fee for automobiles of 10 percent and 12 percent respectively.

Currently, domestic automobile prices are high while the localisation rate is very low, failing to meet commitments in initial investment licenses. Meanwhile, prices of imported automobile components, parts account for up to 48 percent of prices of finished automobiles and also depend on declaration of joint ventures. Illogical things in price declarations have made state management bodies suspect. Thus, in 2004, the government asked the finance ministry to inspect the reason for price hike of 11 automobile production and assembly joint ventures in Vietnam. At the Business Forum held early December, such a topic was also raised.

The price hike for input components and parts is often seen at multinational groups or foreign-invested enterprises having branches in Vietnam. For example, the same automobile component originated from Japan, when being imported into Vietnam, has higher price than being imported into Thailand. According to many financial experts, this may be one of reasons that have pushed automobile prices in Vietnam overly high against other countries.

The general Taxation Department requested businesses to submit their financial reports, import-export reports, cooperate with taxation agencies of many countries through the double taxation avoidance agreement, and also collect information from different channels in order to have maps of all transactions. Nevertheless, more than five years have passed; many joint ventures have still deliberately enjoyed protection policies, maintained sky-high prices.

According to recently-released statistics from the finance ministry, the price of Toyota Corolla 1.8 produced in Vietnam in November 2008 was $19,532, while the same kind of automobile sold abroad had a price of $15,350. Domestically-manufactured Toyota Camry 3.is sold at $38,510 while the world's price of the same automobile fluctuates from $24,215 – 28,695.

Automobile traders said that automobile prices of joint ventures in Vietnam are 1.5-2 times as much as automobile prices in Thailand and 2.7 times as much as that in Japan. Automobile prices at joint ventures are equivalent or only a little bit lower than prices of imported automobiles.